Thus, my question is: What are Microsoft's plans regarding these mobile devices? Will they allow native applications on Windows Phone, such that, for example, barcode reader drivers can be developed that can be accessed in Silverlight applications? Will they re-add "native" Compact Framework support to Visual Studio and just haven't found the time yet? Or will they leave this niche market?

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@ChrisF: I was hoping that maybe someone read an interview or some article on the topic that I have missed that that provides some insight into this matter. Or that maybe someone who works at an embedded device hardware manufacturer can tell us about their future plans...
–
HeinziNov 15 '11 at 10:55

I forget where I read the article might have been on zdnet.com a few weeks ago. The article was one of those "company x makes plans for [Insert Windows 8 Device Here] type articles. It was some speculation in the article, I would assume accurate speculation to a certain degree, the article explain the future of Windows 8 on specialized devices ( ATMs, Point of Sale, ect ). So the future is Windows Phone 7, Windows 8 ( x86/x64/ARM ), and various versions of Windows 8 on specialized devices.
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RamhoundNov 29 '11 at 15:36

As for support for modern devices, virtualization will be required for older versions, support for MWCE 7 and 8 will likely be provided with Visual Studio Next( i.e. VS2012 ). Going forward as I indicated virtualization will be required. The simple fact is that Compact Edition is the old way of thinking ( i.e. Windows XP ) going forward Windows 7 and Windows 8 will be heavly supported. As developers we have to accept that a 10 year support cycle for an OS is not going to happen again, Microsoft made a huge mistake by allowing that to happen, and additional mistakes in the mobile market.
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RamhoundNov 29 '11 at 15:43

I suggest you install VS 2008 for Windows CE 7 because VS 2008 support Windows CE5, CE6 and CE7 devices, and VS 2010 still can't support Windows CE devices.
This is from CE7 website:

NEW: Developing with Windows Embedded Compact 7 (formerly CE)
Just released, Windows Embedded Compact 7 (the next generation of Windows
Embedded CE) is based on the power of the Windows 7 platform. Compact
7 is a real-time operating systems for a wide range of small-footprint
consumer and enterprise devices. Development tools like Platform
Builder, a Visual Studio 2008 plug in, provide an integrated
development environment (IDE) that enables you to build applications
and Windows Embedded CE operating system software in a familiar
environment.

And Windows CE 7 has little relation with Windows Phone 7, because they share the same code base of basic services of Windows 7. There's also no detail information about Silverlight running on Windows CE 7, but I can assure you they support it:

Given my experience with Microsoft I am not sure they know themselves.

Windows Phone 7 is still based on Windows CE (6.5), but the platform is hidden under thick layer of .NET. At work we have a C++ application that was developed for WCE and is now ported to a couple of other platforms, so we also inquired at Microsoft how we could port that application to WP7. The answer was along the lines of "$company did it, so it must be possible. By the way, you need to renew your .NET certification". It seems $company (our competitor) only has (or had at the time; didn't check since) a mock up or demo, not a working product.

I'd really suggest you start looking for some embedded Linux vendor. If you have existing CF code, you should be able to get it working using Mono.